The overall figures mask a wide divergence between individual property sectors, with retails producing annual returns of 16.2%, compared with 10.9% for industrials and just 3.6% for offices.
The retail sector has delivered a higher return over the last quarter--at 4.0%--than the office market has produced over the entire year. Retail has seen yields harden by six basis points and it was the only sector to produce positive rental growth both over the quarter--at 2.3%--and year--at 8.8%.
But returns from the office sector stood at their lowest level in ten years. The poor performance in returns is due to a softening in yields of 30 basis points and to a continued decline in rents. Average office rents fell 7.5% over the quarter, and are now down by 13.9% over the year to June 2003.
The industrial sector benefited from a positive yield shift but this was counterbalanced by stagnant rents. Rents were static over the second quarter of 2003, but fell by 2.2% on an annual basis.
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